Talent Management in Small and Medium Enterprises

Abstract

Risk research has been influenced by a wide range of theoretical perspec- tives and methodological approaches. However, this study demonstrates that in the field of risk management in SMEs it is important to understand why in most micro, small and medium companies risk procedures and con- trol activities are not implemented. There is no need to further underline the importance and the role of the internal control system and risk govern- ance as other researchers already did. The real problem is to understand from which point of view it is necessary to restart analysing this topic and to suggest a new perspective that could lead managers and owners to im- prove their risk attitude. To solve this problem, it is fundamental to start defining the concept of “risk”, which influences the way risks should be managed. In addition, it is essential to concentrate on the significant role of social and cultural factors in understanding risk and the importance of sociological and psychological research to provide new insights and perspectives in this field. Consequently, this study, as it is a multidisciplinary analysis, aims at emphasising the importance of the human being and how the way decisions are made because in SMEs a preliminary and, often unconscious, risk anal- ysis is usually conducted while making decisions. Integrating risk manage- ment means adopting ways to enhance and improve the managerial pro- cesses that already exist. Risk management, as an integral part of the organisational decision- making process, enables each SME to be resilient and agile in all activities by dealing with consequences of unforeseen events. Therefore, by starting improving the awareness, responsibility and sen- sitivity to risks, managers and owners would improve their knowledge about their company and risk appetite framework. Only after this step, each entity might focus on procedures and control activities to be imple- mented and formalise this dynmic and transversal process. Usually, in SMEs this process cannot be formalised in flow charts or written procedures to follow because those companies can be easily man- aged only by the owner. In addition, formalising the risk management pro- cess by defining a group of people with specific competences would be time and cost consuming and not necessary. Procedures start to be im- portant when the size of the company grows. This analysis contributes to existing knowledge as it extends the plat- form for research on strategic decision making in SMEs, by associating it to the risk management process in order to provide a new perspective. However, by attempting to suggest a new reasoning scheme for setting and solving concrete problems, it can be stated that the principles of unity in multiplicity and permanence in changeability are at the very basis of this research as the economic unit of management has been re-stated again. Furthermore, the complementarity and integration of a single process, which has changed in meaning and definition over time, always leads to the ‘company’ as a whole and dynamic system and to traditional theories of the business administration, as an autonomous discipline founded by Gino Zappa. Therefore, the approach suggested in this study is systemic and holistic because the risk management process should be considered as transversal, strategic and integrated into the management of SMEs. After all, risk and uncertainty, with their social and organisational im- plications, remain a crucial element that will continue to affect every single management decision because the human dimension and intervention will always play a fundamental role as we cannot pretend to obsessively and ra- tionally predict, manage and control the future. Individuals and organisations should consider that, beneath the surface of rational risk management procedures, risk and uncertainty require re- sponsibility and capacity to make prompt decisions to face unforeseen events and adapt to the changes of the surrounding environment. Hence companies have no choice but to organise to face uncertainty, as they must be aware of the risks they are going to deal with. As underlined by Falkner and Hiebl (2015), in order to do research in the risk management field, it is necessary to elaborate conceptual and theo- retical studies. Additional qualitative empirical research is needed to shed more light on the implementation of risk analysis and risk management in SMEs. The multiple-case studies represent an important development of this research because it is fundamental to validate and test the theories and concepts analysed in this study. Furthermore, having contacts with companies helps managers and owners better understand their decision-making process and the potential ben- efits of having a risk-oriented mindset. That should provide the basis for improving the risk appetite framework and therefore enhancing the setting of organisational objectives. As regards the limitations of the multiple-case studies, the conclusions drawn can be generalised at a theoretical level (Lukka and Kassanen, 1995) but not empirically (Yin, 1994). Conclusions contribute to the existing knowledge of organisational practices to manage risks in SMEs and of the role of entrepreneurs in fos- tering the development of an appropriate risk culture. The formalisation of these insights provides important groundwork for understanding this com- plex phenomenon and a basis for further studies. For practitioners and professional accountants, this study and future developments are useful in providing the evidence that they play a key role in SMEs, because they are consultants who contribute to the decision- making process and help managers and owners achieve their objectives, sat- isfy the stakeholders and create value over the long period.